Louise works in a foreign branch of her employer's business. She earned $5,000 per month throughout the relevant period.

Question

Quizplus · Accepted Answer

Based on the given information, Louise worked in a foreign branch for more than 330 days in a 12-month period that includes parts of 2013 and 2014. Therefore, she is eligible to exclude a certain amount of her foreign earned income from her gross income. The maximum exclusion for 2013 is $97,600, pro-rated based on the number of days in the year that she was present in the foreign country. Since she worked 8 months in 2013, she can exclude 8/12 (or 2/3) of $97,600, which is $65,067. Similarly, she can exclude a maximum of $99,200 in 2014 (since the exclusion amount increases each year) pro-rated based on the number of days in that year that she was present in the foreign country. Since Louise worked 10 months in 2014, she can exclude 10/12 (or 5/6) of $99,200, which is $83,000. Therefore, she may exclude $40,000 in 2013 and $50,000 in 2014, which is less than the maximum exclusion she is eligible for in each year.

Louise Works in a Foreign Branch of Her Employer's Business